Here's A News Fax, um, Flash On Adoption Curve

A number of years ago an executive from Marriott Hotels was speaking to a credit union audience about that company's management practices and some of the lessons it has learned. That included being especially responsive to guest feedback. And yet, as that saying goes about the best-laid plans...

The executive offered his remarks back in the Stone Ages when being a hotel guest still meant a respite from the office and work. One of the stories shared was how business travelers had been indicating the No. 1 thing they would like to have in their rooms was a fax machine. (Those of you who travel on business may recall that back in the day, faxes sent to guests via the hotel were manna to hotel-keepers from the Non-Room Revenue Gods, often running a buck-a-page or more. I can only surmise that at hospitality industry conventions veterans still get teary-eyed at the recollection.)

So, at considerable expense, Marriott Hotels (along with others) began investing in fax machines for at least some of their rooms reserved for business travelers. And there the No. 1 request of frequent hotel guests sat, unused and gathering dust. It seems that by the time the hotels got around to gathering the feedback, assembling a response plan and installing the machines, the ever-quickening pace of technology had run them over, and those same business travelers had begun to predominantly use e-mail to communicate. (Hence the hotel follow-up Non-Room Revenue strategy of implementing expensive charges for daily Internet connections. That must bring yet another tear to veteran hoteliers as business travelers now use their own PDAs or, if using a laptop, a broadband card.)

Bringing all this to mind was a conversation I had recently with Sara Brooks, SVP-marketing and offerings development with Fiserv. Brooks noted during that discussion that many credit unions are investing in online offerings, yet many consumers are actually skipping over the online channel and going straight to mobile applications to interact with their financial institution. As a result, many CUs might want to rethink their allocation of technology dollars.

On a separate topic, when I asked about the future of rewards programs on debit cards in the wake of the Durbin Amendment (JPMorgan Chase recently sent a letter to its customers saying it will drop rewards on debit card purchases effective July 19), Brooks answered, "I think all of that is up in the air until we are sure of the rules. I still believe there is a significant need for debit. The challenge will be for it to be fully, 100% financed by the credit union. It still has value and it may have to be a merchant-funded rewards program with some sort of credit union loyalty program. You can create stickiness that way."

One More Lesson Learned

Incidentally, another lesson learned by Marriott and shared by that executive was that its research had shown that guests who encountered no problems during their stay told researchers they were "very satisfied." But the most satisfied of all were guests who had had a problem during their stay that was resolved to their satisfaction. He joked that the hotel chain had, in response, explored ways to create small problems for guests during their stays that could be easily resolved.

• There was yet another piece of research shared recently that showed while financial institutions continue to believe rate is what drives consumers, consumers say differently. Rocky Clancy of JD Power & Associates was quoted in a recent study by Javelin as noting that account and service pricing, including interest rates, actually carries little weight in driving consumer decisions. This includes at least to some degree, fees.

Research had shown that the banks that had performed best in terms of acquiring new customers were not those that were rate leaders in their markets, but instead those that had been most aggressive in promotions and advertising.

Still, all of that may take a backseat to a market advantage held by credit unions.

"It's undeniable that the 'blunt instruments' of ad spend, branch density and promotional offers such as gift cards have been effective during the past year in capturing market share," Clancy states in the report. "The question is whether these provide sustainable competitive advantage, particularly when compared with customer acquisition gains resulting from positive past experiences with a brand...The primary factor in creating stickiness with a PFI is positive past experience and perceptions that their institution is more focused on customers than on profits."

• Has the demise of any credit union lent itself more to bad jokes and puns than the recent closure of OTB FCU in New York? OTB, for those of you with actual lives, stands for Off Track Betting, and it served employees of the city's OTB Authority. Like a bettor on a run of bad luck, OTB FCU had seen financial declines in three of the four previous quarters, had negative ROA during all of 2010 (that might make for a good name for a horse, by the way) and delinquencies (go head and insert joke here about how collections were handled) had risen to 7.02% at year-end.

To sum up, OTB FCU finished out of the running, broke its leg and had a meeting with the glue factory staff at NCUA.

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.